Amazon sparks fears with sales forecast

01 February, 2019, 23:28 | Author: Billie Castillo
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Amazon reported strong Q4 2018 revenues in all parts of its business on Thursday afternoon.

Amazon's cloud computing arm, Amazon Web Services provided two thirds of the firm's profit last quarter.

Dave Fildes, Amazon's Director of Investor Relations, said on Thursday's earnings conference call that Amazon is "continually evolving" its tools and services for advertisers, to "make sure they've got a variety of ways to meet their goals".

Amazon is pleased with the Q4 margins of 29.3 percent, he said, and the cloud division's net earnings will always be affected by a combination of price decreases, geographic expansion, added headcount, "and staying very relevant in our customers' minds".

But besides revenue, profit is also a huge deal, and AWS nailed it there, as well.

The company forecast first-quarter operating income of $2.3 billion to $3.3 billion, in line with projections for $2.99 billion.

Net income increased to $3.0 billion, or $6.04 per diluted share, compared with net income of $1.9 billion, or $3.75 per diluted share, previous year and easily topping Street estimates of $5.65 a share. Fast and free shipping helped the world's largest online retailer boost revenue by 20 percent.

Net sales in North America, its biggest market, jumped 18.3 percent to $44.12 billion in the reported quarter.

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In the third quarter, Amazon pulled in US$2.9 billion in quarterly profit, with sales that climbed almost 30 per cent to US$56.6 billion.

Strength in online sales over the holiday period showed Amazon still has room to grow in its core business and is benefiting from excitement around its new devices, said Ron Josey, an analyst at JMP Securities. "Customers purchased millions more devices from the Echo family compared to a year ago", Bezos said. Sales came in at $72.4 billion, beating estimates by $580 million.

Analyst Patrick Moorhead, founder of Moor Insights & Strategy, said in a statement that he attributes AWS's growth rate to "its increased flexibility through "elastic" capabilities as well as increased variability across EC compute capabilities".

The company forecast net sales of between $56 billion and $60 billion for the first quarter, missing analysts' average estimate of $60.77 billion, according to IBES data from Refinitiv.

Last year, Amazon streamlined its ad products so they were less confusing to brands, and folded them under the Amazon Advertising moniker.

Olsavsky also hinted that Amazon's spending will increase in 2019, emphasizing that expenditures in 2018 were light and the company has to keep investing in people and facilities to expand.

Amazon also has been growing its sales from physical stores, including its recently acquired Whole Foods grocery chain.

It also found the company had turned over £6.86 billion in the United Kingdom since 1998, but made £213 million profit - including five years of losses.

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